Tuesday, March 18, 2008

I've found that blogging about my finances has really encouraged me to think about what I spend. It hasn't necessarily stopped me from spending money, in fact, this week (as you'll see,) I spent nearly $90 that wasn't required. But it wasn't idle spending or impulse purchases - I knew that I would be accountable twice over, once to myself when I entered the information in Quicken and once to the world at large when I did my weekly listing of expenses. I thought about the value to myself, not in monetary terms, but in personal satisfaction, and decided that they were worthy expenditures.

There are some people who simply don't have any money for discretionary purchases. But for the vast majority of us, we get into trouble because we spend money on things that don't truly matter to our lives. Happiness is worth spending money on, and sometimes I think personal finance bloggers forget this. However, if we don't stop to evaluate the happiness that will result from our spending, we keep buying more and more things that are meaningless and worthless.

I take away two lessons from the past 3 months.

First, tracking my expenses is fundamentally important. I track them both in Quicken and on my blog. In Quicken, I keep track of every single cent I have coming in or going out, and I do so daily. If I'm at the computer, where most of my expenses occur, I enter them immediately afterwards. If I'm not, I enter them that day. Some people find this tedious and painful - that pain should be telling you something. If you're feeling uncomfortable about your expenditures, you have to get control of them, because finances, more than anything else, cannot simply be ignored and wished away. I did it for nearly two years, and I truly hit rock bottom - no money in my pocket, no credit, no chance to obtain credit, no income, no savings, NOTHING. I went from being 21 years old with a $50k+/year job to nothing - a bit of discomfort felt while seeing expenses in black and white is worth not having to go through that. I use my blog to keep myself honest. If I have to post a weekly report, I can't just lie to myself and "forget" to keep track of my expenses.

Second, I've found that I can replace an urge to spend. Sometimes I go play with my financial outlook in Quicken. Quicken 2008, at least, has a home screen with a calendar showing expected available cash for every day. I've got my paycheck set up as expected income, so I can see my available cash growing and look forward to my net worth increasing. I don't like seeing it drop, so that's an incentive to not spend. If that's not enough, sometimes playing with my money can help. I set up an investment account. My personality is such that I'm not too worried about blips and dips in the stock market, so buying into index funds is similar to "shopping" for me - I'm purchasing something, but it's something that helps my future. Plus, it's fun to watch my investments. If you're the type who panics at the slightest drop in value, this probably isn't for you, but seeing an investment gain money for the first time ever sent a definite thrill through me.

I'll never cut out discretionary spending entirely for my life, and honestly, I'll never want to do so. But I want money to make my life better, and I'm thinking more about how to make that happen.

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About Me

I'm slowly journaling my experiences recovering from $65,000 in debt, dealing with chronic pain, and attempting to rebuild a life. I began writing after I delivered a child conceived through rape, only to have my child die hours after birth.